A long weekend of talks attempting to figure out a way to save Lehman Brothers, one of the country's oldest investment banks, concluded with the bank filing for Chapter 11 bankruptcy protection. The 158-year-old firm surrendered to failure after midnight last night and the effects could already be seen in this morning's down market. Lehman was left with no other option but bankruptcy after they couldn't find a buyer. The New York Times has called this "one of the most dramatic days in Wall Street history"; learn what the financial drama means for investors and Lehman employees when you read more.
At first it looked like Bank of America would save Lehman, but instead B of A bought Merrill Lynch with the idea that Merrill may be the next big bank to go down. Lehman's dire situation and Bank of America's actions have left investors asking which bank will be next, and their stress increases as they watch the value of their portfolios decline. Of the five independent investment banks that lived on Wall Street at the beginning of 2008, only Goldman Sachs and Morgan Stanley are still alive; all of the trouble can be traced back to real estate related business gone bad.
Lehman Brothers employees have been filing out of the bank's Manhattan headquarters from last night through this morning, and the spectacle, complete with police barricades, left some observers asking what famous person was in the area. A cop told the crowd, "Go home. There is no one famous coming out. You are looking at a whole bunch of people who just lost their jobs."